Reliance Industries sells stake in Yemen block to Indonesia's Medco Energi

Reliance Industries (RIL), India's largest private sector enterprise, this week sold its 25 per cent stake in the Malik oil block 9 in Yemen to Indonesia's PT Medco Energi Internasional.

Medco said its wholly owned subsidiary of Medco Yemen Malik Limited had, last month, signed an agreement with RILs Dubai-based subsidiary, Reliance Exploration & Production, which would give economic control of the stake from 1 January 2012.

The sale comes a few weeks after the Mumbai-based oil giant sold its entire 80-per cent interest in two controversial drilling blocks in Iraq's northern Kurdish region to Chevron Corp, in a reportedly $200 million deal. (See: Chevron acquires RIL's Kurdistan blocks)

RIL had acquired the stake in 2001 along with Yemen's Hood Energy (21.25 per cent), Cyprus-based Calvalley Petroleum Inc (42.50 per cent) and Yemen's state-owned oil company YOGC (15 per cent) for a period of 20 years.

Medco will not get the entire 25 per cent stake, but only 21.25 per cent, since Yemen's production sharing agreement requires the state to hold a working interest in the field.

The Malik exploration and production block, located in Hadramaut province covering 2,234 km, has proven plus probable reserves of over 58.6 million barrels of oil (MBOPD) and currently produces between 6 and 6.5 MBOPD.

"The acquisition is in line with the strategy of the firm to strengthen portfolios of productive assets. We have met with the president of Yemen and he gave support on our presence at the area," said Lukman Mahfoedz, president director of Medco.

RIL's divesture is in line with its plans of exiting exploration blocks and focusing on production fields.

Post sale of assets in Iraq and Yemen, RIL still has 10 overseas oil and gas assets - two each in Yemen, Oman, Peru and Colombia and one each in Australia and East Timor.